Network ties in the international opportunity recognition of family SMEs

Kontinen, T. & Ojala, A. (2011). Network ties in the international opportunity recognition of family SMEs. International Business Review, 20 (4), 440-453.

Title:

Network ties in the international opportunity recognition of family SMEs

Author:

Kontinen, Tanja; Ojala, Arto

Abstract:

The importance of network ties is emphasized in the current literature on opportunity recognition. However, it is unclear how firms with limited bridging networks, such as family SMEs, recognize international opportunities through their network ties. In this case study we found that in gaining foreign market entry, those family SMEs that lack existing network ties recognize opportunities through weak ties formed in international exhibitions. The findings also indicate that rather than being proactive, family SMEs respond reactively to opportunities that emerge coincidentally. The trustfulness of the tie is important when they consider these opportunities and form new ties for internationalization. The nature of the cooperator appears to be more important than the target country. From these findings we develop five propositions that are intended to lead to further studies on this topic.
Research highlights
Our findings indicate that in family SMEs, intermediary network ties are a more important source of international opportunity recognition than they are in other types of firm. These intermediary network ties are most often mediated by international trade exhibitions. Interestingly, informal ties with family members do not generally help in the international opportunity recognition of family SMEs. In this regard, we observe a contrast with the knowledge-intensive SMEs where existing network ties had a more significant role in their international opportunity recognition. It seems that in family SMEs, international opportunities are more often recognized through weak ties than is the case in other types of firm. Furthermore, in family SMEs, more time resources are dedicated to the rapid development of new weak ties into strong ties than is the case in other types of firm. In family SMEs, foreign market selection is more related to reactiveness and less to proactive opportunity-seeking with a particular foreign market in mind. The rather low level of activeness towards a certain market can also be explained by the fact that family entrepreneurs trust their feelings about the rightness of a certain tie.
...